Stock of the Week: Tesco

Britain's largest supermarket has kept dividend investors happy since the pandemic, but can it fend off private equity interest after the bumper Morrisons buyout?

James Gard 8 October, 2021 | 12:10AM
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Stock of the week post-it

This week on Twitter we’ve pitched the UK’s biggest supermarkets against each other and market leader Tesco (TSCO) has won the battle of the trolleys. With the recent acquisition of Morrisons for £7 billion by a US private equity firm, UK supermarkets are suddenly in the spotlight as investments. They generate billions in cash, have substantial property assets and have thrived during the pandemic as people were stuck at home. This takeover raises the question whether another big supermarket will be next? UK supermarkets also provided a lifeline during lockdowns – Tesco has a dominant 35% of online grocery shopping – and proved pretty resilient investments as shares soared, as well as keeping dividends flowing during the income crisis. From petrol queues to fears over Christmas turkeys, supermarkets now seem to be in the frontline of the latest UK supply crunch – and have an opportunity to win customer loyalty by keeping shelves stacked and petrol flowing.

Tesco share price over six months

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James Gard  is content editor for Morningstar.co.uk